Something that I've noticed as I've gotten older. The things that learned in your youth and made habits in your life tend to stay with you. It's true whether they're good for you or not.
I'm not a big one on regrets. It's rare that you'll hear me say that I wish I could do something over again. Not that I don't make mistakes. Heaven knows that I do. It's just that I don't like looking back. I've always figured that the solution can be found in the present. So I need to acknowledge the past for what it is and then move on.
But, if I had it do over again, one thing that I would work on would be developing good habits that last a lifetime in more areas of my life. For instance, financially I've always been good about living within my income. Even when I was making 85 cents/hour at part-time jobs through high school. That habit has stood me in good stead.
In other areas, I haven't been so good. Often in areas of health and exercise (but we don't need to get into details - privacy, please!). Developing good habits early would have been helpful. Especially as I get older.
That's why I've always been a big advocate for teaching kids about money. It's almost criminal how little some of our young adults know about the subject. The fault lies with us, they're parents, grandparents and educators. So naturally I take every opportunity to encourage people to help instill good financial habits in their kids.
When I first talked with Rudy DeFelice I saw him as someone else who had an interest in seeing our kids get money smart. He told me about the effort he headed that included a site called KidWorth.com. As I've mentioned before, Rudy invited me to join their team as an Ambassador, something that I was only too happy to do.
Rudy began delivering the local paper at age 10. Growing up he worked on a farm and painted houses. He eventually graduated from Law and Business school. Today Rudy is the proud father of 3 kids who work for their allowances and take an active role in their own financial future. He has practiced law and founded a software and internet information company. After 9 years he left to start Kidworth.
To help explain Kidworth, I asked Rudy if he would be willing to anser a few questions. He graciously agreed.
Gary: Why do you have such a passion for teaching children about money?
Rudy: I’m proud to be the founder of Kidworth, but I am a parent first and foremost. And like most parents, it’s very important to me to teach my kids skills that will serve them in life. I’ve found my generation of parents very committed to helping their kids develop physically, mentally, spiritually. However, we have been less focused on the development of financial skills. Which is ironic, because comparatively, it is easier than the other challenges to parenting. Furthermore, it is universally recognized that financial skills are part of being a successful person.
I found that my kids learned quickly and got excited about handling their money productively, once there was a system and that system was engaging. When I saw my kids being successful, I knew that all kids could. A generation that was financially empowered is enormously important to society and we discovered one tool that can make that happen. Once you have that realization, it’s easy to be passionate about doing that work.
Well, we have a well meaning misunderstanding in the US, which is that we can shield our kids from financial issues. But the truth is, there are large and sophisticated industries focused on encouraging your kids towards relentless consumption – by that I mean messages from advertising, movies, TV, social media. As part of our culture, all kids are exposed to messages from those media. So if you as a parent do not instill financial values in your kids, someone else will. And that someone else will not likely have your kids’ long term interests in mind. Therefore, it is important for parents to take the lead.
Also, it is not realistic to expect kids to be ignorant of financial matters most of their lives then change into capable financial actors just because they turn 18. People don’t learn that way. It is easier to develop good habits throughout life rather than try to change them dramatically later.
Gary: What can parents do to help children be interested in learning money management?
Rudy: One way is to not approach it as a question of saving vs. spending, which is a mistake many people make. For most of us, spending seems pleasurable and saving is a sacrifice, and pleasure tends to beat sacrifice in the long run. But saving is really nothing more than deferred spending – or, smarter spending. We don’t save to build a bigger number in an account ledger, but to be able to do the things that we really want in life.
So we counsel treating spending and saving as an integrated whole. Focus on what your family and kids really value in the first instance. If the important things to you and your kid is travel, to play music, buy a cool computer, give to charities, go to college - whatever it is - start with identifying those things, and make ‘saving’ about building towards those things. We’ve found kids get excited about getting what they value, and they’re willing to dedicate their resources to that. Even to the extent of foregoing immediate purchases. It’s a powerful, learn-by-doing lesson.
That is why on Kidworth, money management starts with goal setting. Let’s start by what would make your life richer, and then use the system to get there. By the way, it works for adults too.
Gary: What financial skills will these children need to have when they reach adulthood?
Rudy: Ideally they will just continue to use the skills they’ve practiced all of their life. If we pretend that kids will flip a switch and become savvy financial actors if they have no actual experience managing their money, we are bound to be disappointed.
Kids should think about their values first, and use their financial resources for things that are consistent with their values. They should be methodical about achieving their goals, and use a system to monitor progress. Adults should do the same things. Ask your grandfather – it’s not that complicated.
Some parents have asked whether they should give their kids credit cards with low limits on them. My view is if you have to do that, you’ve already lost. At some point the kid will be able to get his/her own credit card without those limits, so if they have not built the judgment to manage their activity by then, they will end up in trouble. Better to give your kid experience in managing his/her resources as a youngster, so that an understanding develops between building to what you want, vs. squandering resources on short term whims. If someone develops that understanding as a kid, they’ll have everything they need to be successful adults.
Gary: Can parents who are not financial professionals really help their kids learn about money?
Rudy: :Any parent can do this if they are systematic about it. What we’ve built at Kidworth is a system. If you use the system, your kid will build wealth and develop financial skills. Simple as that. You don’t need to be an expert. The power comes from bringing together resources that already exist, but which are not working together – your values, your kid’s desires, the support of people in your kid’s life.
Understanding the financial markets, the vagaries of various bank accounts and the things we typically consider ‘financial literacy’ can be complicated. But none of that is necessary. My view is that if we start our kids on a system that empowers them to build wealth and use that wealth to give them a better life, they’ll have all they need.
So the most important thing to do is get started. Take the first step – that’s the hardest one for most people. It’s not just for rich kids, or the children of financial professionals. All kids can succeed financially if they use a system that works. That’s why we do this work at Kidworth. Have faith in yourself and your kids. We do.
I'd like to thank Rudy for taking the time to share his thoughts with us. Thoughts that I largely agree with, BTW.
I'd also like to encourage you to use the resources available to you like The Dollar Stretcher.com and Kidworth.com to help your children develop habits and financial skills that will serve them well throughout their lives. Rudy put it well. As parents we make the effort to teach many things to our children to prepare them for adulthood. It would truly be a shame if we neglected their financial educations.
Keep on Stretching those Dollars!